[GyopoPlayboy]

My friend and I are putting money together to lease a beautiful pad that would be in the hottest area with all the nightlife and action. We are doing this for the sole purpose of putting it up on airbnb so that we can charge upwards of $150-250/night (rent on the 2bd apartment itself is $2800).

Inspiration for this idea came from reading on article online about how people worldwide are raking it in by turning their couches or unused bedrooms into hotel rooms for paying customers.

Have any of you tried this route? What are your thoughts? We are looking at 2 places right now.

[Pacesetter20]

Good luck, just make sure you have extra money to cover it in case things don't go as planned.

Also, review the lease, so that it doesn't prevent such activities.

[Rah]

Interesting, let us know how it goes. On a nightly basis I know you could charge 2-3x a monthly rate, but you have constant vacancy risk and constant tenant turnover overhead (cleaning up after the last tenant, etc). I wonder how much more/less profitable it is than a normal long term lease. With the right location maybe you come out ahead. Good luck.

[speakeasy]

I think something like this could possibly work. My main concern would be making sure that your landlord would approve of it. I know that neighbors would probably hate the idea of seeing strangers constantly coming and going and may complain, especially if it's a building with secured access. If they do any serious damage to the unit like start a fire or something, the landlord is coming after you. I wonder if there is any insurance you can buy that would cover such a mishap.

This is an interesting idea and something I may even have to consider trying myself. If you could get several of these going at once, it could be enough passive income to not have to work.

Some things to keep in mind, it must be in a high demand area where you will have few vacancies. You will want to have great decor and amenities there to make the place very attractive visually so you stand out.

Edit - -

What do you guys think would be more profitable? A studio, one bedroom or two bedroom?

And some other questions, if you are out of town, how would the renters get the keys? Is there a convenient way of doing that without having to drive out every few days? What about cleanup and washing sheets? Do you do it yourself or hire someone? Insurance if one of them forgets to lock the door and all your shit is stolen?

[ManAbout]

(10-14-2012 02:58 AM)GyopoPlayboy Wrote:  

My friend and I are putting money together to lease a beautiful pad that would be in the hottest area with all the nightlife and action. We are doing this for the sole purpose of putting it up on airbnb so that we can charge upwards of $150-250/night (rent on the 2bd apartment itself is $2800).

Inspiration for this idea came from reading on article online about how people worldwide are raking it in by turning their couches or unused bedrooms into hotel rooms for paying customers.

Have any of you tried this route? What are your thoughts? We are looking at 2 places right now.

What are the hotel occupancy rates in your city? Does the place come furnished? Or do you have the buy all the furniture yourself? You are going to have to lease it for 15 days a months at your average $200 a night just to break even. How much commission does AirBnB take? You are going to have to account for the cost of a cleaning service and any damages to the apartment and/or furniture.

All in all, it seems like a lot of work. If you get 80% occupancy for example, which is quite optimistic, you might walk away with $1000 to $1500 a month.

[GyopoPlayboy]

These are all very relevant questions. Here are the ones I have answers to:

Does the lease prevent such activities? Almost all leases will at least try to discourage such activity. The only way around this problem is to own the property free and clear. However, this is NOT the case for us as we will be leasing the property, then turning around and renting it out through Airbnb for profit. The language in the lease says that anybody who will be staying there more than 30 days consecutively must have his/her name written down as a lessee. It also prevents subletting the property, although this clause was left up to discretion of the lessor (so, negotiable). But what the lease usually does NOT explicitly cover is the renting of individual rooms or a spare couch. Tiny details, I know. But from a legal angle, it's important.

Would the landlord approve of it? From my research, I find that although most will not, some look the other way as long as it doesn't bother other residents within the complex or interrupt the normal flow of things. Those who don't will first ask the lessee to cease such activities and/or evict them. There may be a few (we haven't found any) who may press for legal action, but the language in the lease makes their cases weak, which is why instead of going through the hassles of legal action, they prefer to ask their lessees to stop or evict them. Evictions can be fought in court, of course, but the lessees also know that they don't have much of a case.

What would you do if your guests damage property? After a particularly embarrassing slew of accidents involving the burglary and damage of rooms back in 2009, Airbnb came out with a $1M guarantee for all host properties (per host), working into their payments a financial system of checks and balances to hold guests more responsible for their actions. So there are two systems at work here: To Airbnb, both the guest and Airbnb will be held responsible for damages, while to the landlord of the property, it will be the lessee (us). As long as the first system works itself out, the second will not need to be implemented. This is a great question, and one that we are currently following up with airbnb's customer service.

Do you have 1 or several properties? Which is more profitable? Since there are a lot of unknowns going into this venture, we thought it would be wiser to start with one to see how it goes. What we learn from this experience will affect our next step.

Is it in a high-demand area? Based on our research, the only way to make this venture somewhat profitable is to target only the most high-demand areas. PM me if you'd like more details, but suffice it to say that this plan would not work if your property is listed in Omaha, Nebraska.

What about the logistics? Cleaning? Getting the keys to the guests? Automating the process? The logistics will and should be handled by either myself or my partner at least for our first property.

What property type would be most profitable? PM me for more details on this subject, as it breaks down quite differently based on who you are catering to, but overall, the most profitable seems to be studios/1br's for couples traveling together.


What is the hotel occupancy rate in your city? Hotel occupancy rate was and is one of the most important metrics we used when looking for the ideal location. However, it varies based on the area, especially in cities that are big. We narrowed down our list to tourist-rich spots where hotel/motel and even couchsurfing occupancy rates were high enough that we could turn a profit.

Your questions are all good. If there's anybody currently trying this out, I'd like to hear how it's been going for you.

[speakeasy]

How do you find hotel occupancy statistics?

Will you be upfront with the landlord about your intentions? Or will you take the risk and not tell them?

[playa_with_a_passport]

Imho, airbnb like small storefronts only make sense if you own the underlaying real estate.

Been doing airbnb for about a year now in a 4 family building(2 apt airbnb and the other ones long term tenants) I own in a shitty part of Brooklyn(Bed Sty/ ENY border). New York real state is its own little universe so unless you doing this in New York Shitty take everything I say with a grain of salt.

When I first started in January I was renting them on airbnb for $60 a night. I wasn't hoping much success because like I wrote before the area isn't the best and there aren't any amenities nearby that make the SWPL crowd go nuts. I am near the subway about 20 minutes ride to lower Manhattan.

To my surprise within the next couple of days I had the two apartments booked 3 months solid. This reminded me of something I read in a RE investing book "if you never have any vacancies that means your price is too low" I have slowly bumped the price to the lower $90's(sleeps 4) and I am still getting above 60% occupancy rate. Trust me you don't want 100% occupancy. If you can do the math I am clearing a decent amount a month but its not without downfalls.

NYC along with a lot of other cities have laws that explicitly forbid short term rentals(anything less than 30 days) so one call from your jealous neighbor and your are done.

Airbnb sends you a 1099 at the end of the year that gets added to your taxable income so make sure you account for that.

Your residential HOI might deny your claim if shit hits the fan at your spot and they determined you were running an illegal hotel.

If your spot is close to 100% occupied that means that its too cheap. If you are in a residential block your neighbors are going to figured out what's going on because of the increase traffic and new faces and your chances increases that something is going to go wrong.

Your book keeping and accounting Game has to be tight because it gets mind numbling keeping track of all those receipts and separating personal use vs rental use.

I know Mixx wrote a data sheet about this but if you intend on making money on this you have to be professional. You absolutely can't Game any of your females guest( 99% of people contacting me has been females) because just one review that says that you were "creepy" or "thristy" and you just fucked your money up.

[speakeasy]

I'm doing a bit more investigating into this. I think PWAP is right. Unless you own the property, it may not fly as a money-generating operation, and even then, you probably won't be making much.

As I'm finding out, most cities make it illegal for a tenant to rent out a property. You are going to be hard-pressed to find a landlord who will let you do it. Many landlords would be okay with it if it's just an every now and then sort of thing, like hosting on couchsurfing. But if every week there's a new stream of people coming in, they WILL find out. And there WILL be complaints from other tenants.

Read this article about a person who was doing exactly what you are planning. He ended up getting evicted and a cease and desist notice from the court.

http://www.fastcompany.com/1839465/how-a...y-landlord

http://www.fastcompany.com/1840715/my-ai...-i-learned

Read the comments as well as it sheds some light on some of the red tape you'd be facing:

Quote:

What Rod said and then some. I'm also a landlord in addition to being an Airbnb user. I like the service when I travel. I've even acted as a guest host for a friend who owns and rents out her guest house in New Orleans on Airbnb. Landlord's insurance and homeowners insurance exist to keep tenants safe, to compensate tenants and guests in case of accidents and injury (like if the roof caves in or something), and to protect a property owner from things like personal injury lawsuits as well as financial damage to a property caused by accidents, tenant or visitor damages, etc. (oops, sorry I burned your kitchen down making coffee for my Aibnb Guests!) Insurance companies are VERY clear on what constitutes a tenant (and even a "guest" or "visitor"), and what is and is not covered, and what activities a tenant can and can not conduct on a property in order for the landlord and property to be covered by insurance. Many commercial activities a tenant does on a property are not covererd and most leases have a section on this.

According to my own insurance company (I had thought about renting my own places out for Airbnb) neither landlord's nor homeowner's insurance covers bed and breakfasts (which is basically what Airbnb is), or a tenant subleasing out a property (why so many landlord's require any roommates of lease holder to also be on the lease).

As a user of Airbnb I also had concerns last year about my personal property. I was staying in a great place in SF, but there were no locks on the bedroom doors. I didn't even think about it, but my traveling companion did. His thoughts? Say another guest walks off with my Ipad, Laptop, and jewelry or something. Is the Air b n B Host responsible for negligence? How would I even make an insurance claim and police report?

I brought up this question to Airbnb last year after there was a big hooey in one of their rentals when an Airbnber totally trashed an apartment in SF and it made news headlines. I also raised the question if a "guest" is injured on an Airbnb property, who is responsible? Is a landlord vulnerable to lawsuits because of a tenant renting the property on Airbnb? What sorts of insurance do home owners and renters who are renting out for Airbnb need to cover their butts? My answer, sadly, from Airbnb, was what I can only describe as "Thank you for your concern" corporate PR spin - they completely avoided the question.

Like I said, I do like airbnb, and realize everything in life has risks, but as a landlord, no way in heck I'd be happy if a tenant was renting my property out on Airbnb. It's just too risky. I'd evict them asap. As for Airbnb, It will probably take a lawsuit for them to get their heads out of the sand and deal with this matter with their hosts and guests. It's a great service, but right now is pretty much just an underground B & B service that in many cases and cities is illegal due to lack of property business licenses, permits, and yes, insurance. And, as we see in this article, renters acting as Airbnb hosts are also taking a big risk with their landlords. I expect we'll see more Airbnb hosts get called out on this.

Quote:

Landlord here: By making AirBnb a full-time business out of your appartment, you crossed the line.

For a landlord, there are insurance considerations, cost considerations (water/power/etc.), and the fact that a continuous stream of guests coming and going can be disruptive to other tenants.

If it were an occasional thing, you could let it slide. If it were a condo that you owned, you could work it out with the condo board.

But re-purposing your rented apartment as a full time hotel is abuse, just the same as it would be if you opened a cafe or concert venue in the same space.

Quote:

A landlord insures the building that they own for specific kinds of usage - i.e.: tenants renting & living there, doing normal tenant things. Insurance is underwritten based on a common understanding of what that implies in terms of risk.

The risk profile for insuring a hotel is going to be considerably different than that of insuring a place that someone lives.

Its like car insurance: you have different insurance and different costs depending on what you're doing with your car - whether its driving too and from work every day, using it commercially to make deliveries, or keeping it for "pleasure" - evening and weekend use. Each has different coverage and different rates. Here, you can drive your "pleasure" insured vehicle to work 4 times a month (or something). If you get in an accident on your way to work, the insurance co will investigate and find out how often you've been driving to work. If you've been doing so every day, in a "pleasure" insured vehicle that doesn't cover work commuting, they will reject your claim, and you're screwed.

What that means for real estate is that if an apartment used as a full time AirBnB suite caught on fire and burnt down the building, sorting out the insurance would be a mess - i.e.: the landlord would make the initial claim, the insurance co would find out that the unit in question was being used for a purpose not covered by the policy (commercial hotel), and deny it. The landlord would then probably appeal with the insurance co and simultaneously sue the tenant. The insurance co would probably defensively sue the tenant as well, in case the courts stuck them with the tab. Everyone would be trying to land the liability on some one else, and the courts would sort it out over a very long time.

Same story if someone started a bakery in their apartment, or a cafe, or basically anything other than normal living.

I thought the idea sounded interesting at first, but I see that from a landlord's perspective, this isn't going to fly for insurance purposes. Maybe the alternative is to buy a condo. But even then, many home owners associations are going to be against it. I imagine a constant stream of foreigners coming in and out is going to depress housing values. It might help if it's sort of a detached condo, like a townhouse. If you can find one in a city where real estate is cheap with low property taxes but demand for vacation rentals is high + have an excellent local and attractive pad. And then if you did that, would you still make much of a profit when factoring in mortgage, insurance, property taxes?

[OGNorCal707]

I'm not well versed in this realm, but I did hear some news stories about this being a big issue in San Francisco with people leasing apartment only to rent them out for profit on airbnb. There were a lot of situations where neighbors complained to the owners, and guest renters caused damage to the apartments, and lots of conflicts between landlords and the people on the lease renting out on airbnb. I think they are trying to pass some law to forbid in in SF.

[playa_with_a_passport]

I know quite a few acquaintances who are doing it in their rental two bedrooms. AirBNB is not so good as a money making scheme for renters but its an excellent way of subsidising a 2 or 3 bedroom apartment without having a fulltime roommate. Is all about not being greedy and keeping a low profile to avoid problems. If you keep the minimum stay at 7 days and you set up your pricing so that you have a maximum of 2 or maybe 3 guest a month, you shouldn't have any problems and most of your rent should be covered. Also, set up a zero tolerance rules regarding visitors, smoking, quiet hours and disruptive behavior. They violate any of your rules, just go "El Mech" on them and throw their shit out of the window.

As for insurance, anti short term rental laws and liability issues, they only really apply to people who are renting entire apartments. If you are renting rooms in an apartment you are living in, You have plausible deniability.As far as you are concerned they are roommates not "transient guest." After all there are no laws that state you can't have more than one roommate a month. Just be very vague about your apt exact location on the airbnb ad.

I am actually going through the hassle of setting up a bona fide Bed and Breakfast. As long as I make enough to pay my mortgage and living expenses I am good. I do not want permanent tenants. NYC is extremely tenant friendly and its not uncommon to take up to a year to evict a non paying tenant from an apartment and during that whole time you are required to maintain their apt and provide them with heat, hot water and a working lock.

[username]

Idea I might do:
-Get an apartment in a foreign country (Brazil, Colombia, Argentina, etc.) that is popular with tourist in a nice part of the city, good size apartment, and that isn't too expensive.
-Advertise the rental as being super safe, English speaking, secure, and trustworthy to other gringos.
-Assume $1,000/month expense for the apartment; assume 70% occupancy (21 days) at $75/night which would be $1,575/month in income.

So it could be a good way to cover some of the expenses, allow you to get a nice apartment in a good neighborhood, and force you to be social.

If you could double up on the rents, like have two rooms for rent, then you could be bring in enough money, $3k, to live off of comfortably. Hell, even if rent was only $50 a night you would still be doing pretty well with 2 rooms.

[speakeasy]

(10-15-2012 08:16 AM)playa_with_a_passport Wrote:  

As for insurance, anti short term rental laws and liability issues, they only really apply to people who are renting entire apartments. If you are renting rooms in an apartment you are living in, You have plausible deniability.As far as you are concerned they are roommates not "transient guest." After all there are no laws that state you can't have more than one roommate a month.

Aren't roommates required to be named on the lease?

[fearless_seducer]

(10-14-2012 02:58 AM)GyopoPlayboy Wrote:  

My friend and I are putting money together to lease a beautiful pad that would be in the hottest area with all the nightlife and action. We are doing this for the sole purpose of putting it up on airbnb so that we can charge upwards of $150-250/night (rent on the 2bd apartment itself is $2800).

Inspiration for this idea came from reading on article online about how people worldwide are raking it in by turning their couches or unused bedrooms into hotel rooms for paying customers.

Have any of you tried this route? What are your thoughts? We are looking at 2 places right now.

Yeah, it's not a bad idea. But I still think that the best bet for supporting your playboy lifestyle would be making money online with almost zero cost.

[pitt]

(10-15-2012 08:16 AM)playa_with_a_passport Wrote:  

I know quite a few acquaintances who are doing it in their rental two bedrooms. AirBNB is not so good as a money making scheme for renters but its an excellent way of subsidising a 2 or 3 bedroom apartment without having a fulltime roommate. Is all about not being greedy and keeping a low profile to avoid problems. If you keep the minimum stay at 7 days and you set up your pricing so that you have a maximum of 2 or maybe 3 guest a month, you shouldn't have any problems and most of your rent should be covered. Also, set up a zero tolerance rules regarding visitors, smoking, quiet hours and disruptive behavior. They violate any of your rules, just go "El Mech" on them and throw their shit out of the window.

As for insurance, anti short term rental laws and liability issues, they only really apply to people who are renting entire apartments. If you are renting rooms in an apartment you are living in, You have plausible deniability.As far as you are concerned they are roommates not "transient guest." After all there are no laws that state you can't have more than one roommate a month. Just be very vague about your apt exact location on the airbnb ad.

I am actually going through the hassle of setting up a bona fide Bed and Breakfast. As long as I make enough to pay my mortgage and living expenses I am good. I do not want permanent tenants. NYC is extremely tenant friendly and its not uncommon to take up to a year to evict a non paying tenant from an apartment and during that whole time you are required to maintain their apt and provide them with heat, hot water and a working lock.

Do you mind if you tell us how are you setting up your bed and breakfast? Did you buy a place? Are you renting it?

I am also looking to get another place for my airbnb operations, OP let us know how this goes.

[pitt]

Can anyone think of a good excuse to tell landlords why i may have lots of guests coming to my house?

I am looking to rent a new place to put on airbnb. I want to tell my landlord that i have lots of friends around the world and i may have lots of people coming to see me. However, i want to come up with something better. Like tell him I write for a blog and we do lots of meet up sessions in order to expand our ideas. Anybody have any other ideas?

[Pete]

I have thought of this. As I have a house with 4 rooms all for myself.

BUT, no one here has thought of the cleaning (housekeeping). Everytime a guest leaves you have to clean up...

[trader]

Came across this really good blog post on buying an apartment/condo for Airbnb.
http://needwant.com/p/buying-apartment-airbnb/

Guy runs it remotely, it's very cash flow positive, and will pay off the apartment in 4 years. Looking into this seriously now.

[speakeasy]

(11-04-2013 09:37 PM)trader Wrote:  

Came across this really good blog post on buying an apartment/condo for Airbnb.
http://needwant.com/p/buying-apartment-airbnb/

Guy runs it remotely, it's very cash flow positive, and will pay off the apartment in 4 years. Looking into this seriously now.

Wonder how close this apartment is to the Strip? Vegas hotels can be so cheap I'd think it would be tough to turn a profit on a 1-bdrm apartment.

[Magyarphile]

This could definitely could be done in Budapest. Actually, it already is. The rents are so low here, even for a nice pad in the city center. Westerners come here for a couple weeks or a month and they don't have a clue about the local rental market. They are paying 2-3 times the monthly rate one would pay for an annual lease and think they are getting a bargain.

[Lisitshko]

@Magyarphile

It's the same here in Sofia. I rent a nice place for 400 lewa (200 Euro) and rent it out for 200 Euro a week. I have a different angle on that, because I normally live in the apartment. Meaning I only rent out one week a month, sleep at friends or girls places and my rent is covered. I will set up something similar in Varna and Burgas though in the summer, at the seaside.

I wanted to visit a girl in Budapest anyways which was couchsurfing here in Sofia. If you're interested in teaming up to get something really nice in Budapest, or at Balaton for summer, just PM me. Split risk is not too bad in anything real estate related, and if it works out you can still set up more apartments on your own.

[outhustleu]

(10-14-2012 02:58 AM)GyopoPlayboy Wrote:  

My friend and I are putting money together to lease a beautiful pad that would be in the hottest area with all the nightlife and action. We are doing this for the sole purpose of putting it up on airbnb so that we can charge upwards of $150-250/night (rent on the 2bd apartment itself is $2800).

Inspiration for this idea came from reading on article online about how people worldwide are raking it in by turning their couches or unused bedrooms into hotel rooms for paying customers.

Have any of you tried this route? What are your thoughts? We are looking at 2 places right now.

Interesting idea, I think New York City actually banned this type of activity. Cool idea, alot of people do this when big events come to town like Olympics, big sporting events or festivals, etc.

Other problem is you have a very limited market. Most people going to a city to party are going to look at hotel rooms, you really have to educate the consumer of your existance. Also, your price seems a bit steep when in Chicago at least, I could get a hotel room for say $50 more than your charging even in the hottest areas.

I like how your thinking though. I have always wanted to do something similar but more of a hostel. The appeal isnt a hostel b/c hostels are a dime a dozen but if you create a cool atmosphere and concept people could gravitate towards it.

[elabayarde]

I actually did this in DC, but my lease ended earlier than I thought. I made a Killin. My rent was about $1350, and I charge 150 a night on weekends, $200 on event weeks. When things werent busy, I charged $100. I dropped it down to this price when I needed to put someone in it.(rarely)

[Isaac Jordan]

I've been using Airbnb for the past three months and it's been fantastic. I'm averaging about $1200 profit per month, although I travel a lot for work and have family/a girlfriend in a nearby city, so I take every opportunity to rent the place out (between 12-16 days per month).

Some pieces of advice for those looking to rent out their pads:

Consider outsourcing the cleaning to a maid service.

Most services clean a client's home about twice a month; if you can offer them more business they'll be willing to give you a better price. I pay $60 per cleaning and charge my guests a $20 "cleaning fee" after each stay, so it's only a $40 net cost. I charge between $100-130 per night, so it's definitely worth it, especially if I can book a two- or three-night stay instead of just a single.

Take quality pictures.

Like in online dating, pictures can make or break you. Airbnb offers free professional photography to those with qualifying locations, and if you live in a bigger complex you can lift pictures of courtyards, pools, gyms, etc. from the complex's website. At the very least, make sure you clean the apartment and adjust the lighting before taking pictures, and edit them before uploading. Adding captions to your pictures provides a nice touch, as most people neglect to do this.

Work hard up front to score a couple good reviews.

When I first started, I had a buddy of mine "book" my place for $10 just so he could leave a glowing review (he never actually stayed). Since then, the more good reviews I've earned, the more rental requests I've received. Make sure you communicate promptly and do your best to accommodate the first couple guests you have (although really you should do this for all of them). Little things, like leaving a welcome note on the counter or fresh breakfast food in the fridge, go a long way towards making a good impression. For guests with longer stays (or those that I know won't have a car), I'll offer to stock my fridge with a couple of their favorite items. I also provide them access to my bar and assorted coffees/teas, although most guests tend to go out enough to where they don't really use that much.

Take advantage of concerts, sporting events, trade shows, conventions, and festivals.

I'm three blocks away from a major football stadium, and my usual weekend price of $130/night doubles for game days. I've already booked two of them in September, and one couple (season ticket holders) told me if they like the place they'll probably want to book the rest of the home games this season. If your place has good logistics, stay abreast of any upcoming events and take advantage of people who will pay more to be closer to the action.

Consider geographical arbitrage for longer stays.

A three-week rental at my place would earn me about $2k after Airbnb takes their cut. I could easily book a $500 plane ticket to Central America, find a cheap place to stay for $400/week, and after food and other expenses just about break even. Even if you don't want to rent out your place that often, it's nice to have a vacation pay for itself.

Use a lock like this and/or a thermostat like this to enable your location independence.

When you start to rent out your place this often, the two biggest concerns become 1) logistics and 2) cleaning time/effort. A cleaning service solves the second problem, and this lock solves the first. Instead of being there in person to pass off the keys, or hiding them under the doormat, consider a programmable lock. You can change it whenever someone leaves, and have different codes for different people (yourself, the cleaning service, family, etc.). Only issue is you may not be able to modify the existing lock if you yourself are renting; this may be better suited towards owners.

The thermostat is great for those who live in more extreme climates and need to manage utility costs. Combined with the lock and a maid service to clean the place for you, you've got just about everything you need to manage your place from abroad.

[Clint Barton]

For those living in big cities, look at keycafe.com for key pickup and key drop-off.